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Recent false claims cases and settlements

This year continues to be eventful for settlements of False Claims Act allegations. Below is a summary of a few of the interesting cases that have occurred in recent months.

Florida Pain Medicine and its owners agree to pay over $1 million to resolve claims of medically unnecessary nerve conduction studies

On April 13, 2016, the United States Attorney’s Office for the Southern District of Florida announced a $1.1 million settlement with Florida Pain Medicine Associates, Inc. (Florida Pain Medicine) and its owners, Drs. Bart Gatz, Alexis Renta and Albert Rodriguez, “to resolve allegations that they violated the False Claims Act by billing Medicare for medically unnecessary nerve conduction studies (NCS).”

The government “alleged that patient records indicated that a substantial percentage of the NCSs that were performed at Florida Pain Medicine were medically unnecessary. The NCSs were often administered without an accompanying electromyography (EMG) test,” which substantially decreases the diagnostic value of the procedure. Rosa Gomez, who worked in Florida Pain Medicine’s billing department, originally brought the allegations.

Dermatology physicians and practice pay $1.9 million to settle claims of overbilling for evaluation and management services

On April 18, 2016, the United States Attorney’s Office for the Northern District of Georgia announced that it has reached a settlement with dermatologists Margaret Kopchick, M.D., and Russel Burken, M.D., and their practice group, Toccoa Clinic Medical Associates, “who agreed collectively to pay $1.9 million to settle claims that they violated the False Claims Act by billing Medicare for evaluation and management (E&M) services that were not permitted by Medicare rules.”

The government alleged that Drs. Burken and Kopchick billed for E&M services on the same day as they performed procedures, which is not permitted under Medicare rules. They also upcoded E&M service levels, encouraging Medicare overpayment.

According to the press release, “[t]his resolution is part of the government’s emphasis on combating health care fraud under the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by the Secretary of the Department of Health and Human Services in May 2009.”

Drug screening service company pays $2.5 million to resolve claims swapping arrangement

On April 12, 2016, the United States Attorney’s Office for the Western District of Kentucky announced that it reached a settlement with PremierTox, who agreed to pay $2.5 million to settle claims that it violated the False Claims Act by improperly billing Medicare and Medicaid for drug screening services. According to the press release, “PremierTox previously did business in Tennessee under the name Nexus.”

The government alleged that PremierTox submitted three different types of false claims from September 2011 to June 2014. “The government alleged that PreimerTox had a swapping arrangement in which Nexus gave below cost discounts on its urine drug tests to patients in Tennessee without insurance, in exchange for physicians’ referring their patients with Medicare or TennCare coverage to Nexus. The government also contended that Nexus submitted excessive claims to Medicare and TennCare for laboratory testing that was medically reasonable and necessary.” In addition, the government claimed that PremierTox supplied free testing cups to encourage Kentucky-based medical offices to use PremierTox’s services.

The allegations were originally raised in two lawsuits: one filed in Tennesse by a former clinic office manager and one filed in Kentucky by the former CEO of PremierTox.

On April 18, 2016, the United States Attorney’s Office for the Eastern District of Virginia announced a $400,000 settlement with Bon Secours Health System, Inc. and one of its surgical oncologists, Dr. Eugene Y. Chang, M.D., to settle allegations that “while at Bon Secours Maryview Medical Center in Portsmouth, Dr. Chang billed Medicare and other federal healthcare payors for non-covered breast examinations and ultrasounds.”

The government alleged that from June 1, 2010, to December 31, 2014, “Dr. Chang falsified documents with diagnosis codes, such as ‘lump or mass in breast,’ where none existed. Chang allegedly did this in order to induce federal healthcare payors to pay for non-covered ‘screening’ breast examinations.” Dr. Chang allegedly assigned codes that indicated to Medicare and other patients that the examination was based on a complaint by the patient and was diagnostic in nature. However, no such complaints were indicated on Dr. Chang’s patient charts. Additional allegations included “arranging for certain patients to receive screening breast examinations and screening breast ultrasounds at approximately six-month intervals following screening mammograms, and improperly billing these services as ‘diagnostic.’”

The settlement is the result of a lawsuit filed by one of Dr. Chang’s former colleagues, a former Bon Secours practice manager.

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